Master Budget Preparation

(Master calculate preparation) Sopchoppy Company manufactures a red industrial spot. The company is preparing its 2000 master budget and has presented you with the following information. 1. The December 31, 1999, respite winding-clothes for the company is shown below. SOPCHOPPY COMPANY Balance Sheet December 31, 1999 AssetsLiabilities and Stockholders rightfulness bullion $ 5,080 Notes due $ 25,000 Accounts Receivable 26,500 Accounts Payable 2,148 Raw Materials Inventory 800 Dividends Payable 10,000 finished Goods Inventory 2,104 Total Liabilities $ 37,148 Pre stipendiary Insurance 1,200 Common Stock $100,000Building $300,000 Paid-in cracking 50,000 Accumulated wear and tear (20,000) 280,000 Retained Earnings 128,536 278,536 Total Liabilities and Total Assets $315,684 Stockholders Equity $315,684 2. The Accounts Receivable balance at 12/31/99 represents the stay balances of November and December credit sales. Sales were $70,000 and $65,000, respectively, 3. Estimated sales in gals of dye for January by means of May 2000 argon shown below. January 8,000February 10,000 defect 15,000 April 12,000 May 11,000 Each gal of dye sells for $12. 4. The collection pattern for accounts receivable is as follows 70 percent in the calendar calendar month of sale 20 percent in the first month after the sale 10 percent in the second month after the sale. Sopchoppy expects no bad debts and no customers are given capital discounts. 5. Each gallon of dye has the following touchstone quantities and cost for station materials and now apprehend 1. 2 gallons of direct material (some evaporation occurs during mathematical operationing) $0. 80 per gallon $0. 6 1/2 hour of direct labor $6 per hour 3. 00 Variable command processing overhead time is applied to the product on a machine-hour basis. It takes 5 hours of machine time to process 1 gallon of dye. The variable overhead rate is $0. 06 per machine hour VOH consists entirely of advantage costs. Total annual fix ed overhead is $120,000 it is applied at $1. 00 per gallon based on an pass judgment annual capacity of 120,000 gallons. Fixed overhead per year is composed of the following costs Salaries $78,000 Utilities 12,000 Insurancefactory 2,400 Depreciationfactory 27,600Fixed overhead is incurred evenly throughout the year. 6. There is no stemma blood of Work in Process. All work in process is completed in the period in which it is started. Raw Materials Inventory at the beginning of the year consists of 1,000 gallons of direct material at a standard cost of $0. 80 per gallon. There are 400 gallons of dye in accurate Goods Inventory at the beginning of the year carried at a standard cost of $5. 26 per gallon reign Material, $0. 96 Direct Labor, $3. 00 Variable Overhead, $0. 30 and Fixed Overhead, $1. 00. 7.Accounts Payable relates solely to raw material. Accounts Payable are paid 60 percent in the month of obtain and 40 percent in the month after leveraging. No discounts are given fo r prompt payment. 8. The dividend will be paid in January 2000. 9. A new piece of equipment costing $9,000 will be purchased on March 1, 2000. Payment of 80 percent will be made in March and 20 percent in April. The equipment will have no salvage value and has a useful life of three years. 10. The check payable has a 12 percent kindle rate interest is paid at the end of each month.The principal of the note is paid off as cash is available to do so. 11. Sopchoppys attention has set minimum cash balance at $5,000. 12. The ending Finished Goods Inventory should be 5 percent of the next months needs. This is not true at the beginning of 2000 due to a miscalculation in sales for December. The ending inventory of raw materials should be 5 percent of the next months needs. 13. Selling and administrative costs per month are budgeted to be 30 percent of each months sales. Of that amount, 50 percent is depreciation.These costs are paid in cash as they are incurred. 14. Prepare a master bu dget for each month of the first quarter of 2000. a. sales budget with expected cash collections, including the accounts receivable for the next quarter b. production budget c. purchase budget with expected cash payments, including the accounts payable for the next quarter d. direct labor budget e. manufacturing overhead budget f. finished goods ending inventory budget g. selling and administrative budget h. cash budget i. balance sheet j. income statement